Tracking Productivity in Real Time

7 Pages Posted: 6 Dec 2006

See all articles by James A. Kahn

James A. Kahn

Yeshiva University; National Bureau of Economic Research (NBER)

Robert W. Rich

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Abstract

Because volatile short-term movements in productivity growth obscure the underlying trend, shifts in this trend may go unrecognized for years - a lag that can lead to policy mistakes and hence economic instability. This study develops a model for tracking productivity that brings in additional variables to help reveal the trend. The model's success is evident in its ability to detect changes in trend productivity within a year or two of their occurrence. Currently, the model indicates that the underlying trend remains strong despite recent weak productivity data.

Keywords: productivity, economic growth, factor model, regime switching

JEL Classification: O4, O51, C32

Suggested Citation

Kahn, James A. and Rich, Robert W., Tracking Productivity in Real Time. Current Issues in Economics and Finance, Vol. 12, No. 8, November 2006 , Available at SSRN: https://ssrn.com/abstract=949625

James A. Kahn (Contact Author)

Yeshiva University ( email )

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National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Robert W. Rich

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States
216 579-2928 (Phone)

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